Every business is set up principally to make money. And so when your business is not earning enough money (turn over), then there is a problem, because it means that the business cannot be as profitable as it should be.
Here’s a list of Top 7 reasons why your small business may not be making enough money, to guarantee you a reasonable profit.
#1: Insufficient Capital
Having the right amount of capital is very important in running a successful and profitable business. When your business is not adequately capitalized you find yourself unable to optimize business opportunities, and to manage your cash flow better.
#2: Poor Customer Service
The most prized asset in a business is the customer – he/she is the first reason why you’re in business anyway! A happy and satisfied customer assures you of repeated patronage, and even referrals to other potential customers.
When your customer service is poor, it scares customers away and does not allow your business to make as much sales as it should.
#3: High Prices:
It’s very tough today in the business world, due to market changes, income fluctuations and evolutions in customers’ and clients’ demands. Setting the right pricing is very important in driving patronage and running a successful business.
Identify what segment of the market you want to play, and let that guide you is setting the right pricing model. In other words, ensure that your pricing is competitive – not too high to drive customers to the competition, and not too low as to make the business unprofitable.
#4: No Specific Income Targets
Before going into business, make sure take the time to craft your business strategy and the value proposition that will drive the business. These should all be a part of your business plan.
That is, try to identify your ideal customers, the right location for your business, target cash flow projections, and so on. Setting income goals (revenue and profit) is important because it challenges you to monitor your financials, ensuring ultimately that the business is profitable.
#5: Poorly Priced Products:
Although it is very challenging to come up with the right prices for your products, it’s something that must be done.
To do this, first, conduct a market survey to get a good understanding of your market and the competitive environment.
Then consider your own cost profile. All of these will help you determine how much to charge for your products. Setting a low price could yield plenty of buyers patronizing you, but you may not make enough profits at the end of the day
#6: No Online Presence:
Taking your business online is one way to make more money, as you are able to reach out to a wider audience of potential customers.
Remember, your product is mostly what differentiates you from your competitors. Take your product to a platform you think matches the exact product you wish to showcase.
You could utilize Instagram to display quality images and short videos of your products to a potential audience as well. For videos, try making YouTube your best bet.
Every business has an appropriate online platform for both big and small businesses to thrive and strengthen their brand visibility. use the power of social media and stand out from the crowd.
#7: Low Turnover
There could be many problems leading to slow or low turnover. You might have reviewed and analyzed your business severally without knowing where the actual problem is.
Your issue may be that you’re not making the right volume of sales you need to, either due to poor product quality or related issues.
Also, think of how the audience perceives your point of sale experience or project completion and delivery. Are you too slow? Is your customer service friendly enough to pacify angry customers?
Incorporate these ideas or steps into your business to become more efficient and make enough profit to sustain the business.